When the U.S. Environmental Protection Agency (EPA) released its proposed Renewable Fuel Standard (RFS) requirements for the coming year, it proposed slashing the amount of ethanol that will be used and let to outcry from a number of farm groups.
The agency proposal would cut the statutory level of 14.4 to 13 billion gallons of ethanol and cut what is called the volumetric requirement from 18.15 billion gallons to just over 15 billion gallons.
The agency said proposed ethanol reduction was needed because U.S. consumers have been using less gasoline and because the industry had all the ethanol it needed to meet the blend standard of 10 percent ethanol in motor fuels.
Opponents of the move said the EPA doesn't have the statuory authority to lower the total requirement in this way, without certain conditions being present. The agency can lay down a "general waiver" but only if "severe economic harm or inadequate supply of domestic ethanol" can be shown. Neither of those conditions are present, said opponents.
Bob Dineen, presient and CEO of the Renewable Fuels Association accused the EPA of rewriting the statute and redefining the conditions upon which a waiver from the RFS can be granted.
"The EPA is proposing to place the nation's renewable energy policy in the hands of the oil companies," he said. "That would be the death of innovation and evolution in our motor fuel markets, thus increasing consumer costs at the pump and the environmental cost of energy production. This proposal cannot stand."
The proposal, which was announced on Friday (Nov. 15) was the first step in the process. The next step is the gathering of public comments for 60 days.
Dineen said that during that stage of the process he expected that "reason and fact" will replace the "fear and misinformation peddled by Big Oil and seemingly adopted for this proposal."
He called on the Obama administration to continue its commitment to biofuels as a way to address climate change and said that lowering the biofuel standards would harm the country's economic recovery as it would lead to a rise in the price of gasoline.
Dineen also attacked the proposal for the effect it would have on innovation in cellulosic ethanol production. "An Administration intent upon seeing the next generation of biofuel technology commercialized cannot eviscerate the demand base that would allow those fuels to succeed.
"And an Administration that understands the importance of a healthy farm economy cannot rip away demand that farmers relied upon in growing the largest corn crop in history," he added.
Both the American Farm Bureau Federation and the National Farmers Union voiced their disapproval of the move Friday.
Bob Stallman, president of the AFBF, said his group is disappointed in the EPA's proposed reduction in the amount of ethanol that must be blended into the nation's gasoline supply, which "strikes a blow to conventional ethanol production as well as dampens the prospects for advanced biofuels."
The intent of the Renewable Fuels Standard revised in 2007 (RFS2) was to get more renewable fuels into our nation's pipeline and move beyond the E10 fuel blend, he said, adding that the EPA proposal would move the country in the opposite direction.
"This decision has the potential to pull the plug on new technologies and investments that are currently in place and needed to produce advanced biofuels.
Stallman said the ethanol industry, from farmers to investors and everyone in between, "needs stability and certainty."
Staunch renewable fuels advocates, the National Farmers Union also said it was disappointed in the EPA proposal. The group's president Roger Johnson said Big Oil had determined that biofuels are taking their market share and that's what was behind this proposal.
"At a time when advanced and cellulosic biofuel plants are just starting to come online, the EPA is sending a negative signal which will stifle investment in this nascent industry," Johnson said.
"Lowering renewable fuel targets below that which can be produced and below what is already being produced will sink corn prices, kill jobs and damage rural economies."
Johnson said the RFS is the nation's only real climate change policy since biofuels reduce greenhouse gas emissions by over 30 percent compared to regular gasoline. He urged the Obama administration to reverse the proposal.
The Advanced Ethanol Council also expressed disappointment at the the proposed cuts to ethanol that were proposed by the EPA on Friday.
"While only a proposed rule at this point, this is the first time that the Obama Administration has shown any sign of wavering when it comes to implementing the RFS," said Brooke Coleman, executive director of the Advanced Ethanol Council (AEC).
Coleman said bigger picture issues must be resolved in the final rule because advanced biofuel investors pay attention to them.
The Renewable Fuel Standard is designed to bust the oil monopoly, which isn't going to be easy, he said, adding that the oil industry is behind the arguments to lower these ethanol standards.
After the EPA announcement, oil industry spokesmen urged the EPA to go even further and get rid of the RFS completely.
The Renewable Fuels Association counters that the agency proposal would mean more oil must be consumed and would leave consumers with higher gasoline prices.
"Cutting ethanol consumption by 1.39 billion gallons will increase demand for gasoline by 948 million gallons," the association said in a statement.
The association cited a Louisiana State University study that showed any kind of surge in demand for gasoline will increase gasoline prices by 5.7 cents per gallon on average.
"As a result, American drivers will spend $7.6 billion more on gasoline purchases in 2014," the association said in its statement.